Japan Cracks Down on Tamagotchi Pirates

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Just how hot is Tamagotchi? The attention-grabbing virtual pets are so big that Japanese police took the unusual step Thursday of raiding the offices of three companies accused of hawking pirate versions. Such crackdowns are seldom made in a society where imitation is very much seen as the sincerest (and most profitable) form of flattery.

The police action came at the request of Tamagotchi's true manufacturer, Bandai, which a day earlier reported dismal earnings for the fiscal year ended on 31 March. The company posted a net loss of US$69 million, compared with a profit of about $90 million a year before.

Much of the red ink is due to Bandai's troubled tie-up with Apple for production of Pippin CD-ROM players. The line lost nearly $56 million last year, blowing away the approximately $30 million in sales racked up by Tamagotchi.

That is undoubtedly why Bandai leaned on authorities to take aim at pirate producers. Police searched the offices of Tokyo Biken, a watch and jewelry concern, and of KDY and Eiko, both trading companies. They are accused of selling an item called the New Tamago Watch, which basically operates the same way Tamagotchi does, and is believed to be mass-produced in China and Taiwan.

According to police, thousands of New Tamago Watches have been sold in Japan amid a chronic scarcity of Tamagotchis, which have attracted loyal followings among Japanese kids and grown-ups alike. In April, Bandai asked the Tokyo District Court to stop seven different companies, including KDY and Eiko, from selling New Tamago Watches.

But authorities have their work cut out for them. It's estimated that at least 30 different Tamagotchi rip-offs are now available in Japan, and probably elsewhere in the world as the toy takes overseas markets by storm.

So high is the demand for Tamagotchi, and so short the supply, that Japanese newspapers have buzzed for months with stories of thefts and assaults related to the popular toy. In February, a Yokohama boy was arrested on charges of threatening another kid and making off with his Tamagotchi.

Earlier this week, Bandai called off a planned merger with Sega Enterprises, which on Wednesday reported more than a 50 percent decline in net profit for the last fiscal year. The gamemaker's US subsidiary lost about $172 million.